# USDA Loan – How to calculate the Guaranty Fee

Following are a few examples of different scenarios to show how to calculate this fee correctly.

Example #1
Purchase Price \$250,000
Appraised Value \$258,000
Borrowers want to finance \$8,000 in closing costs in the loan since the appraisal is higher than the purchase price. In addition, they will finance USDA’s guarantee fee.
Loan Amount \$258,000 divided by .98 = total loan amount of \$263,265.31
Subtract total loan amount \$263,265.31 from loan amount \$258,000 = \$5,265.31 USDA Guarantee Fee
Total Loan Amount \$263,265.31 X 2.00% = \$5,265.31 USDA Guarantee Fee

Example #2
Purchase Price \$300,000
Appraised Value \$300,000
There is no room to finance closing costs; however, the borrowers would like to finance the USDA guarantee fee.
Loan Amount \$300,000 divided by .98 = Total loan amount of \$306,122.45
Subtract total loan amount \$306,122.45 from loan amount \$300,000 = \$6,122.45 USDA Guarantee fee
Total loan amount \$306,122.45 X 2.00% = \$6,122.45 USDA Guarantee Fee

Example #3
Purchase Price \$175,000
Appraised Value \$190,000
There is a \$15,000 difference between the appraisal and the purchase price, however, the borrowers only want to finance \$10,305 in closing costs plus the USDA fee.
Purchase Price \$175,000 + \$10,305 closing costs = Loan Amount \$185,305
Loan Amount \$185,305 divided by .98 = total loan amount \$189,086.73
Subtract total loan amount \$189,086.73 from loan amount \$185,305 = \$3,781.73
Total Loan Amount \$189,086.73 X 2.0% = \$3,781.73

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